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The American Gaming Association is urging a federal court not to stop New York from enforcing its gambling laws against prediction markets offering sports-event contracts.
In a filing ahead of a Sept. 14 hearing in the Southern District of New York, the AGA argued that contracts based on whether a team wins, covers a point spread, or finishes above a scoring total are sports bets in substance. The broader dispute is whether those products fall exclusively under federal derivatives law, as the Commodity Futures Trading Commission argues, or whether states may also regulate them as gambling.
AGA says New York’s sportsbook rules would be undermined
According to the filing, New York and the AGA contend that allowing sports-event contracts outside the state’s gambling framework would weaken the licensing, consumer-protection, and tax systems that apply to state-authorized sportsbooks.
The AGA said state-licensed sportsbooks in New York operate under rules covering licensing, age limits, responsible-gaming controls, and market restrictions, while prediction exchanges can offer similar sports outcomes without being part of that system. The filing also said New York mobile sports betting generated about $1.32 billion in state tax revenue in 2025.
The trade group’s brief stated that the CFTC’s position “obfuscate[s] a simple truth” and that “prediction markets offer sports betting.” Judge Lorna G. Schofield allowed the AGA to file the brief without yet deciding whether the group can formally intervene in the case.
Federal courts have split on the issue
The United States and the CFTC sued New York on April 24 after the state gaming commission ordered Kalshi to stop offering sports-event contracts without a state license. New York Attorney General Letitia James also filed state enforcement actions against Coinbase Financial Markets and Gemini Titan.
The legal fight comes amid conflicting court decisions. The fact pattern cited in the case includes the Third Circuit giving Kalshi preliminary protection against New Jersey enforcement, while the Ninth Circuit ruled against Kalshi in Nevada on Aug. 28 in _KalshiEX LLC v. Assad_. The AGA cited that Ninth Circuit decision as support for New York’s authority to regulate sports contracts as gambling.
A separate Southern District of New York ruling in July denied Kalshi’s own injunction request against New York regulators.
What New York readers should watch next
Judge Schofield is scheduled to hear arguments on the federal plaintiffs’ preliminary-injunction motion at 11 a.m. ET on Sept. 14. That hearing is about temporary relief while the lawsuit continues, not a final decision on whether sports-event contracts are swaps or whether federal law ultimately preempts New York gambling enforcement.
For New York bettors and sportsbooks, the immediate question is whether the state can keep enforcing its existing rules against these products while the case moves forward.
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Source: As reported by Cheryle.
